IDA refutes investment report

6 Jun 2003

The Industrial Development Authority (IDA) has dismissed the findings of a major new survey that shows a dramatic drop in the number of foreign direct investment projects made in Ireland last year and a virtual meltdown in software investment activity.

According to a report by Ernst & Young on project-based foreign investment announcements in Europe, inward investment to Ireland fell by 55pc in two years. A total of 51 new investment projects were attracted into Ireland in 2002, with 61 projects and 113 projects being registered for 2001 and 2000 respectively.

The report also found that foreign direct investment in Ireland’s software industry has fallen by three-quarters since 2000 – just eight investments in software projects were made here last year, compared with 12 in 2001 and 31 in 2000.

A spokesman for the IDA reacted angrily to the report and queried the definitions underpinning it. “Ernst & Young defines foreign investment differently to the IDA, the Irish government or any other IDA-type agency around the world. According to independent analysis, which has been done for many years, Ireland is the number one location for software investment, the number one location for pharmaceuticals and is rapidly becoming a leading centre for shared services.”

However, data from the IDA’s own website seems to tally with the findings of the EIM report. Only eight investment announcements relating partially or wholly to software appear on the website for 2002: APC, Micros Systems and Net IQ in Galway; RF Integration and Dow Corning Plasma in Cork; and Symantec, Bausch & Lomb and Netg, in Dublin, Waterford and Limerick, respectively.

A spokesman for Ernst & Young was unavailable at press time but in literature accompanying the EIM report, the firm defines new projects as those based on new greenfield investments, new functions co-located with an existing activity and expansions – increases in capacity of existing functions at their present location.

In other findings of the survey, it was confirmed that the US continues to be Ireland’s largest investment benefactor by far, accounting for 32 of the 51 new projects, or 63pc, registered last year. Next came the UK with seven.

In a blow to Dublin’s reputation as a European investment location, the number of investments in the capital fell by 20pc, from 20 projects in 2001 to 16 in 2002.

The overall number of projects in Europe has declined by 4pc from 1,974 in 2001 to 1,895 in 2002, according to the report. US investment has fallen by 16pc. The top five sectors in 2002 – software, automotive, business services, electronics and pharmaceuticals – accounted for 53pc of all projects compared to 55pc in 2001 and 60pc in 2000. The study also finds that companies making inward investment decisions have begun to look further afield, with inward investment to non-EU countries rising from 20pc in 2000 to 32pc in 2002.

The survey also found that project size had decreased significantly resulting in 29pc fewer jobs than in 2001.

By Brian Skelly